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It's Fun, It's Useful, It's a . . . Mercedes?

Stung by sagging sales, the venerable German auto maker is reinventing itself. Its first sport utility vehicle--made in Alabama--is among ways it's pepping up its image.


TUSCALOOSA, Ala. — When the sequel to Steven Spielberg's "Jurassic Park" opens this Memorial Day weekend, the curtain will be raised on a new dinosaur fighter.

Maneuvering its way through the pulse-racing scenes of "The Lost World" is a new Jeep-like truck built near this unlikely city by an unlikely company: Mercedes-Benz. No mere cameo performer, the M-Class is decked out in a jungle-camouflage paint job and has a near-starring role.

This sport utility vehicle has an even bigger part inside Mercedes, the distinguished German car and truck pioneer that just a few years back was being derided as an automotive dinosaur that had hopelessly lost its way.

Not only is the M-Class the first mud-spitting four-wheeler to be built by Mercedes-Benz, it is the first Mercedes of any kind to be built in volume outside of Germany. As such, it is emblematic of a wrenching five-year effort by Mercedes to reinvent itself.

Moving offshore from its deep but problematic roots in Stuttgart, Mercedes is globalizing operations--building plants in China, India and Brazil in addition to the United States, where the new Alabama factory officially opens this week. At the same time, it is revamping its familiar sedans and moving into new lines altogether: mini-cars, subcompacts, electrics, roadsters, coupes--and the M-Class, which goes on sale in September.

For image-conscious Californians who are their cars, Mercedes' make-over has an important resonance. The state is the auto maker's single biggest U.S. market, accounting for nearly one sale in four. The dealers can't wait.

"I've already got 200 to 300 orders for the M-Class," said Fletcher Jones Jr., a Newport Beach dealer.

These new Mercedeses are not your father's. Audaciously bidding to upend its hard-earned personality, Mercedes--slightly dull, snooty and unapproachable--now purports to be fun, youthful and accessible.

"It's been an incredible cultural change," said Matt DeLorenzo, editor of AutoWeek magazine. "There will be lots of MBA candidates writing about this before it's all done."

Mercedes' roots stretch back 111 years to two men and their namesake companies: Carl Benz, builder of the world's first automobile, and Gottlieb Daimler, inventor of the internal combustion engine. After Daimler's death in 1900, his company began building fast, stylish cars. The result was the first Mercedes, named after the 12-year-old daughter of Daimler's successor.

Benz also was lured to top-of-the-line vehicles. Along with Rolls Royce, Benz sedans were among the best known early imports to the United States. A 1911 Benz sold for $3,250 to $8,500, compared to $900 for the Model T Ford.

With the German economy weakened by World War I, the two firms merged in 1926 to form Daimler-Benz, which grew into a vast conglomerate with interests in transportation, aerospace, railroads and financial services.

A Symbol of Luxury, Quality

Mercedes-Benz, the car and commercial truck subsidiary, became a benchmark of automotive excellence. Its three-point star--one of the world's most recognized brand icons--was a symbol for luxury, safety and quality. German engineering was touted as the best that money could buy.

The best had no limits. It was almost a point of pride within the confines of Mercedes' Stuttgart headquarters that its conservatively styled sedans were over-engineered and overpriced.

Such snobbish appeal and Germanic arrogance played well in the conspicuously consuming 1980s. If you are what you drive, a Mercedes said you had the best and paid the most. S-Class sedans, which could easily cost more than $100,000, became de rigueur in Beverly Hills.

As the value-conscious 1990s dawned, the Mercedes mystique vanished like a morning mist. No one seemed to want one anymore.

If she could have returned from rock heaven, Janis Joplin might have changed her tune: "Oh Lord, won't you buy me a Lexus?" The new Toyota model, like Nissan's Infiniti, offered German-like luxury and performance for less money.

"We found ourselves on the wrong side of the fence," admitted Michael Basserman, chairman and chief executive of Mercedes-Benz of North America.

Recession, Taxes Hurt U.S. Sales

Sales tumbled worldwide. In the United States, they fell 41% from a peak of 99,314 in 1986 to 58,868 in 1991, a year after the Lexus LS400 was introduced for up to $15,000 less than a comparable Mercedes. Sales also were crippled by the recession following the Persian Gulf War and imposition of the luxury tax on autos that cost more than $35,000.

Although the Japanese intrusion served as a wake-up call, there was internal resistance to change. After all, Mercedes had been making cars its own way for nearly a century. The rear-wheel-drive sedans were renowned for their performance, quick handling and stiff suspensions. Enthusiasts speak of their "growl" providing character and evoking emotion.

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